“We’ll never get out of debt”

1

I wake up to find my husband isn’t there. I look at the clock. It’s 5 A.M. Did he fall asleep on the couch?

I find Pat in the living room, in the maroon chair, his knees to his chest. My throat clenches. I crouch beside him. “What is it?” I ask. He looks at me, tears shining on his cheeks. “We’ll never get out of debt,” he says, softly, his voice thick with helplessness. My throat relaxes. Thank God it’s not a dead parent or a drowned child or an airborne virus that’s killing entire urban populations. It’s merely our debt, a problem I’m already well aware of.

This particular morning, Pat is holding vigil over our money problems. It could as easily have been me balled up in the living room with him in the role of soother—the one saying that everything will be all right without quite knowing how. It’s likely that bouncing this anxiety between us has, in some primitive fashion, reduced our individual stress over money. But our children are getting older—one is a third grader and the other is in preschool. It’s clear they need financial stability. As do we. My husband and I are both 48. We have no retirement plan. We have no savings. We don’t even have an emergency fund. Given the state of our life (not to mention the country), we know we must radically change our circumstances and our behavior.

Early in our marriage, we each earned so little in our respective artistic jobs (I’m a writer and actress; Pat is an actor) that we basically covered only our bills and spent whatever was left on cigarettes. We were deeply in love and devoted to our work. Owning a couch didn’t seem necessary. Pat came into the marriage with a sizable $70,000 student-loan debt, which we underpaid monthly. The first major thing we put on a credit card was our $5,000 wedding. Months later, my best friend lay dying of AIDS in New York City: The trips from our home in Chicago, combined with the wedding debt and student loan, laid a solid foundation for the money problems we’ve had ever since.

Soon after our four-day honeymoon at a Marriott in a Chicago suburb, I came home to find Pat washing out a large apple juice bottle. He held it up. “This is where we’ll put our change,” he said proudly. “As soon as we walk in the door, we’ll empty our pockets.” He produced a few coins and dropped them in, the silver clinking against the thick glass. Both of us were waiting tables then, so we always had plenty of change. Pat explained that this didn’t add up to enough to open a savings account, but if we threw it into the jar every day, we would eventually see our money grow. And, indeed, we took great pleasure in watching the coins rise to the top. Because a full jar held around $350, which roughly paid our rent, you could say that it stood between us and the street.

Life on the financial edge

I was on the dean’s list in college. Pat has a master’s in fine art. We are, by most American standards, reasonably bright and well educated. We were also, I realize now, incredibly naive. We believed that if we both worked hard and proved talented at our jobs, we’d be rewarded with enough income to live on. And certainly, by most artists’ standards, we were succeeding, in that we managed to support ourselves by doing what we loved best. Still, it never occurred to either of us that we needed anything more than a checking account and the change jar. In truth, we thought the jar idea was the most brilliant one we’d ever had, better even than wrapping tape around our feet, sticky side out, and walking over the living room carpet to pick up dirt. Who needed a vacuum cleaner?

Sadly, more than 20 years later, our approach to money hasn’t changed much, though we eventually moved to Los Angeles and even bought a vacuum. We both still work hard—Pat does guest spots on TV and stays at home with our two kids, sparing us expensive child care. I write books, magazine articles and TV shows. Together, we earn anywhere from $60,000 to $140,000 a year. The trouble is, with that much fluctuation, we find it difficult to create financial structure. We live fairly frugally, but when we have money, we end up spending it not only on the stuff we can’t afford when we’re broke but on all the usual emergencies that daily life brings. When we don’t have money, we use credit cards to pay the bills as well as to make a dent in our debt. Last year, for instance, we put a surprise $10,000 tax bill (the downside of my earning more than usual) on plastic. So when Pat and I, finally tired of our early-morning vigils, decided to do something about our debt, we knew we needed a plan. And because planning is not our forte, we were sure it had to come from a professional.

It turns out there are many kinds of financial planners. After reviewing the qualifications of several in our area, we choose Phillip Cook, a certified financial planner. (The certified designation means he has extra training in finance and passed an exhaustive exam in handling all kinds of money matters, including insurance and investing.) He is also independent; that is, he doesn’t work for a brokerage firm, which, we assume, means he won’t try to sell us something solely for his own bottom line.

When we meet, I’m struck by how California he looks in a pressed pink shirt. “Did you bring your tax return?” he asks, looking at the envelope in Pat’s hand.

“Uh, no,” Pat says, slapping the table. “I should have thought of that. We could bring it with us next time.”

I look at Cook to see any trace of a reaction. Are we the dumbest couple to come waltzing through his door in years? He manages money. We have none to manage.

“Well, show me what you’ve got,” he says. Pat hands him a spreadsheet of the bills we currently pay and a brief overview of our average expenses versus income. Our expenses usually amount to around $5,000 a month, including $900 in minimum credit card payments; $2,000 for rent, utilities and a parking space; $250 for preschool; $150 for phone service; $1,000 for groceries; and $250 for health insurance co-pays and deductibles. That means we have to earn $80,000 a year simply to stay on top of our bills and basic needs. If the transmission goes out on our car (as it has twice) or I have a miscarriage with no health insurance (as I did once), our bills shoot through the roof. Last year, we earned $100,000 and still had moments of real financial panic, like the time an anticipated $5,000 check got held up, which sent us into overdraft at the bank. Cook looks through the folder as Pat and I explain the various fine points, then gives us a bemused smile. “Well, there’s no magic here,” he says. “You’re going to have to minimize the cash outflow. You’ll have to start living a very ascetic life, and it’s not going to be much fun.”

Hammering out a basic budget

Cook explains that we need to draw up a budget, something Pat and I have never considered. To our way of thinking, we underearn; we don’t overspend. But Cook is quick to point out that even people who aren’t big spenders often treat themselves in ways that work against financial freedom. He warns us about an I-deserve-it mentality. “You tell yourself that you can have those new clothes or go out to dinner because you’ve worked hard and deserve it. That allows you to spend money you should probably be putting away for retirement or the kids’ education.” Seeing our stricken faces, he suggests, “Try to look at a budget as something that will give you back your power, rather than as a punishment. Your ultimate reward is being debt-free.” He explains that when we’re crunching the numbers, we’ll notice that we have some fixed monthly expenses (for example, rent, medical co-pays) but should focus our attention on the variables: food, clothing and entertainment. “That’s where you’ll start making the hard choices like, ‘Do you need cable? Or Netflix?'”

Once we whittle down
our variable expenses, he tells us that the next step is to commit to the new budget for a couple of months. “Then check to see if your actual expenditures match the budget you’ve drawn up. If not, you need to reexamine your commitment to being debt-free—you may say you want it, but do you mean it enough to stick to a plan? A budget is as basic to your financial life as DNA. Nobody wants to live within one because it’s not as much fun as spending whatever you want, whenever you want. But the people who do it are successful.”

To start the process, he instructs us to go home and write down our life goals. “These will inform your financial goals,” he says. That makes sense to me because what has gotten us to Cook’s office is concern about being able to care for the kids—and ourselves. I figure if that’s in the forefront of our thoughts, it will probably be easier to pass up a night out at dinner and the movies in favor of a rental or, better still, something on network TV, because we’ll have given up cable.

Once we’ve agreed on that idea, Cook tells us to come up with two lists: the first enumerating three major financial goals for the coming year; the second outlining three goals for three years down the line. “Write them on a Post-it and stick it where you’ll see it every day,” he tells us. It strikes me that having a certified financial planner is a lot like having a personal trainer: You pay someone to tell you what you already know, only instead of “Exercise more; eat less” it’s “Make more; spend less.” Afterward, driving home in our battered ’87 Nissan, Pat says it’s embarrassing, almost infantilizing, that we’ve chosen to be monitored in this way. “But if that’s what it takes….” he says, reaching on top of the dashboard for the toothpick we’ve used to turn on the radio ever since the knob fell off eight years ago.

That evening, after we’ve put the kids to bed, Pat and I sit down together to discuss and write down our life goals:

1. Provide for our children (including clothing, extracurriculars and college educations).

2. Continue working at jobs we love. We are willing, however, to redefine what those jobs might be. I could be very happy teaching writing at a local college (steady pay) rather than devoting all my time to freelance writing (sporadic pay). And Pat would enjoy running a local theater as much as he now enjoys acting on TV four or five times a year.

3. Spend time with our children and each other.

We’re on a roll, so we decide to move on to our one-year financial goals. We grapple over what’s realistic but settle on…

1. Create at least one consistent source of income between us.

2. Pay off $10,000 of our $50,000 credit card debt. We’ve already consolidated our debt on lower-interest credit cards; Cook has told us to pay off the highest of those first.

3. Stick to our new budget.

Our three-year goals are simply an extension of our first-year goals. We plan to pay off all our credit card debt, secure one full-time job between us and move to a cheaper neighborhood.

A few days later, our goals taped to the computer, we sit down with Pat’s spreadsheets. I’m grateful to Pat for taking on the overwhelming task of itemizing our expenses because it has become all but impossible for me to even look at a bill. I love the spreadsheets because they suggest there is a logical way to manage our seemingly unmanageable money problems.

At first glance, many of our monthly expenses seem fixed: rent, utilities, insurance, schools, groceries. But when we get down to the variables, we manage to find the promised wiggle room. Clothing, for example. Neither one of us is a clotheshorse, but I’ve bought more clothes lately because of some weight loss. “OK. I don’t have to continue filling my closet,” I say, quickly making a mental inventory of my new acquisitions. “So let’s put down $25 a month for underwear, socks and the odd pair of shoes for the boys.”

“I’m putting down $50 a month, just to be safe,” Pat says. “That’s actually $250 less a month than we spent on clothes last year,” he says, writing it on the spreadsheet. “Next, transportation.”

I suggest that Pat get a bike so he can work out as he saves gas money. Wow, I think. We’ll be richer, and he’ll be fitter. It’s fun working as a team on our money.

“We could switch phone companies,” Pat says, pointing to the spreadsheet. He gets on the computer and finds a plan that would lower our monthly bill by $50. His brows furrow with concentration, making him look smart in a sexy-nerd kind of way.

“We could cut down on the number of times a month we hire a babysitter,” I suggest, reluctantly. One of my favorite things in the world is going out to eat and see a movie with my husband.

“Or we could find more families to trade babysitting with,” Pat says, referring to the swap many of our neighbors engage in to combat child-care costs. Ultimately, we discover an extra $500 a month to put toward our debt. We look at each other, flushed with our success. Pat smiles. I grab his arm and pull him into the bedroom. We discover that debt-solving sex is pretty much like make-up sex with fewer apologies and more spreadsheets.

Talking tough about money

Pat and I have never had a problem connecting physically. But when it comes to money, we’re like a round peg and a square hole. We don’t fit. At least one partner should be knowledgeable about finances. But both of us are clueless and angry at each other for our mutual cluelessness. I’d like for us to be able to get through a financial conversation without slamming a door. For this we call Amanda Clayman, a psychotherapist in New York City who specializes in financial wellness. Just the phrase—financial wellness—fills me with hope. It has a spalike sound, as if I’m going to lie in a milk bath, ruminate on money and arise from the tub without wrinkles or debt. We’ve been successfully living within our budget for a month. Other than when I’ve had to say no to the kids for various reasons, it has been surprisingly easy and I’m enjoying an unfamiliar sanctimonious feeling.

Clayman recommends that Pat and I commit to four phone sessions over three months. Pat is less than enthusiastic because he’s looking for practical nuts-and-bolts fixes, not hand holding. In fact, I often accuse him of hoping for a lightning-bolt solution: discovering a bag of money in a dark alley—or declaring personal bankruptcy. I am deeply resistant to the latter, which would annihilate our solid credit score. Ironically, despite our debt, we have a good track record of paying bills on time, so this is one thing I’m loath to relinquish.

As a matter of fact, Pat and I argue about this very issue minutes before our second phone session with Clayman. Due to an overdraft, one of our credit card payments didn’t go through. “Now that card’s annual percentage rate will go up. Then they’ll all go up,” Pat says. “The only option is bankruptcy,” he concludes.

“And then we ruin our credit score,” I say, attempting to stay calm, “meaning no one will ever rent to us again.”

“Why do you do that—jump to the worst-case scenario?!” Pat yells, grabbing a coat, even though it’s 75 degrees outside. The coat grab is a sign that our argument has kicked to a higher level.

“That happens to be a matter of opinion. Bankruptcy actually sounds pretty worst-case scenario to me,” I retort.

“You don’t know that!” he yells, opening the door, then immediately dialing down the volume because of the neighbors. “I think you’re more worried about what your parents will think than you are about fixing our problem.”

“Fine. Whatever. Let’s just forget it and declare bankruptcy.”

“That’s just snide! All I’m saying is that we should talk about it!” Pat screams, slamming the door and
staying inside. We look at each other, spent. Tears sting my eyes. Time to call Clayman.

On the phone, we rehash our argument. She suggests we table the bankruptcy talk until we’ve explored all our options. She does say that it can be a valuable tool when used at the right time but points out that our credit card debt is lower than our annual income. Which, to me, suggests our problem is solvable.

What Clayman wants us to consider is how we can work together to create and maintain cash flow so we don’t resort to credit cards for bills and emergencies. She suggests finding extra, steady work, thereby generating some regular income.

My immediate reaction is to worry: Won’t getting ongoing part-time jobs curtail our ability to aggressively pursue the current freelance careers we love? Plus, given our lack of traditional office experience, I fear we’d end up slinging burgers. And how would we pay for child care if Pat isn’t watching the kids?

“Give it a time frame,” Clayman suggests. “It’s discouraging to think that you’ll have to do a particular job forever, or that you’ll have to live somewhere less than ideal forever. Instead, tell yourself, For this year we’re going to try these changes and really discuss how we’ve been living and how we communicate about money. After a year, we can make a decision about how we’ll move forward.”

For the next month, that’s what we do. We discover that figuring out how to earn more is tougher than creating a budget. We can’t fathom how to take on more work and run both children to and from their separate schools, be there for the youngest when he comes home at noon and carve out time for me to write, which is our main source of income. We could wait tables at night, but because we did that back in our 20s, the thought is extremely depressing to both of us; it feels like a major step backward. In our next session with Clayman, I tell her we want to protect our happiness, which we’ve managed to maintain despite our financial woes. As an example, I explain that going out for a cup of coffee gives me tremendous joy because it gets me out of the house, where I’m stuck writing all day. Since cutting out these daily escapes from my computer, I’ve been feeling isolated and a bit blue. Although I did slip out of the house one afternoon to a $3 movie house I found in the neighborhood.

“As long as you continue putting energy into finding $3 movie theaters and free child care, you can afford to go out for a coffee and fulfill your need for social contact,” Clayman says. “This shouldn’t be an exercise in self-punishment.”

I take Clayman’s advice and allow myself a trip to the coffee shop, though I order a small cup instead of a large. I do feel a tad less deprived. When I get home, I find Pat at his desk looking satisfied. “I just found out about some data-entry work I could do at home.”

“That’s good,” I say, apprehensively. “When would you do it? I need the hours during the day to write.”

“Well, we’re going to have to figure out a compromise somehow,” Pat says, his voice immediately tight.

This is our cue to start blaming and yelling. Instead, we both breathe, then pull back. I remember that in our second session with Cook, he told us to get very specific about how we were going to achieve our financial goals, to write down each step. “Let’s make a schedule of when you’d do the work,” I suggest. “You can try it for three months. Then we can weigh the benefits of that income against the time I’m taking away from writing and see if it’s worth it. And let’s decide how many hours you’ll put in a week.”

Pat pulls out a legal pad and jots down “Ten hours a week for three months.”

“How about 20 hours?” I ask.

“If I can’t work during the day because you’re writing, that’s four nights a week I can’t put the kids to bed or do anything else,” Pat tells me. We hash out a schedule that involves my quitting work early two days a week to pick up our older child at the bus stop. That way, Pat can put in some daytime hours. We can do it for three months, I think. We can put up with anything for three months.

Practicing change

It’s our final session with Clayman, who asks us how it has felt to actively manage our money. “We’ve made a bit more, spent less and had a lot less fun,” I tell her honestly. But I also add that I’m feeling more confident about our ability to pay off our debt and change our financial situation.

“Change is the right combination of discomfort and hope,” she says.

I like that phrase so much, I write it down. That’s exactly how I’ve felt—uncomfortable and hopeful.

“Have you been talking to other people about your situation?” Clayman asks.

Have we ever! After our initial reluctance to share what seemed to be our congenital inability to manage money, neither Pat nor I can stop talking about it. What we’ve found is that everyone has a story to tell—friends with solid jobs, gorgeous homes and investments admit to making financial missteps and experiencing money panic every bit as real as ours. Take, for instance, a recent incident at a children’s birthday party with a bunch of mothers I barely know. As we make polite conversation, one woman asks my older son, Spencer, “Are you going to summer camp?”

He reaches for a mini-tart. “No,” he says casually. “We can’t do stuff like that right now because we’re in debt.”

A flaky bit of croissant catches in my throat. I cough and reach for my glass of orange juice, take a sip and wash down the obstruction. After an awkward silence, I say, “Yup. We’re working on clearing that up. So we’re not spending on extras this year.” The mood in the room shifts. Conversation takes off. The women exchange tales of their own money woes and fears. Several ask for Clayman’s and Cook’s contact information. I leave the party feeling like the go-to girl for sharing financial fears and finding relief.

Four months since we first met with Cook and three since we began working with Clayman, Pat has earned more through an extra job and I’ve significantly reduced my spending. If we continue in this vein, it looks as if we’ll achieve two of our first-year financial goals: to stick to our budget and to pay off $10,000 in debt. We are about to tackle the third goal—securing one full-time job between us. I’ve been investigating teaching positions. Pat is now directing a show, which he hopes will lead to more steady theater work. For the first time, we were able to stash away $2,000 in a savings account—our new emergency fund. Both Clayman and Cook made it clear that to avoid relying on credit cards for crises, we needed to save a sum in a separate account for the unexpected, beyond what we use for living expenses. As Clayman pointed out, “emergencies” are really part of the routine anyway—car transmissions die; eyeglasses break. Having an account like this lets us deal with them more calmly.

Pat and I are still in the nascent stages of altering our feelings, our habits and our expectations regarding money. Yesterday was one of the afternoons we had scheduled for me to watch the boys so he could work. When I got home from picking up Spencer at the bus stop, I walked over to my desk to sift through the mail, pausing at a utilities bill. In the past, I’ve handed unopened bills directly over to Pat because it makes me so anxious to know how much money is going out. Then I remembered Clayman’s advice in our final phone conversation: “Practice change,” she said. So I slipped my finger under the flap of the envelope and tore it open.